Cayman Islands: Offshore Legal and Tax Regimes
This page was last updated on 28 June 2019.
The Cayman Islands Government has built a regulatory regime that is highly favourable to offshore operations, especially since there is no taxation in Cayman other than stamp duty and import duties (see Domestic Corporate Taxation). There are more than 93,000 companies registered in Cayman, along with about 150 banks and 750 insurance companies. See Law of Offshore for a detailed treatment of the legal regimes for banking, insurance, trust management and mutual funds. In this section offshore corporate forms are summarised, along with details of the fees payable by the various types of financial institution.
The Cayman Islands Tax Information Authority (TIA) released statistics in September 2011 that showed the number of reports made to European Union member states under the savings tax directive.
The largest number of reports on accounts based in the Cayman Islands were sent to the French tax authority, with 3,744 having been sent in 2010, followed by Portugal with 1,058 and the UK with 866. However, the USD3.8m in savings income reported to the UK was substantially higher than the USD1.2m reported to the French authorities and USD587,269 reported to the Portuguese.
The highest aggregate amount of savings income was reported to the Netherlands (USD488,781) from 72 reports.
In total, 7,161 reports were made to EU member states by the TIA on USD6.95m (12.2m in 2009) in savings income held in the Cayman Islands.
Cayman Islands’ Financial Secretary, Kenneth Jefferson on 2 October 2009, tabled an austerity budget designed to tackle the significant challenges the jurisdiction is facing as a result of the financial crisis, which left the government little choice but to increase a multitude of taxes and fees. These included, among others, annual company and general registry fees, mutual fund licence fees, banking and trust licence fees, insurance licence fees, securities and investment business fees.
The Cayman Islands Legislative Assembly on 2 December passed the Money Services Amendment Bill, 2009, which amends fees payable by financial services businesses.
The effect of the amending legislation, coupled with associated Regulations that the Cabinet passed on 1 December is to:
- Increase the annual licence fee payable by money services businesses to KYD10,000 (USD12,345);
- Introduce an annual fee of KYD1,000 for each additional subsidiary, branch, agency or representative office that a money services business operates; and
- Introduce a new transaction fee payable to the government, equal to 2% of the gross amount transferred overseas by a money services business on behalf of its customers. However, such a fee cannot exceed KYD10 per transaction.
In March 2010, the Cayman Islands government welcomed the general thrust of the conclusions of the Miller Report, particularly its main recommendation that the introduction of direct taxation in the jurisdiction should be avoided.
The Miller Commission was created by the Cayman government last year in response to the UK government's concerns that the global economic and financial crisis has damaged the territory's long-term economic and fiscal health, given its reliance on a healthy international financial services industry. In a statement, Cayman Premier, McKeeva Bush, said that the proposals have been broadly accepted as the way forward for the islands, and will be instrumental in drafting final proposals.